EU funds delay leads to £5m interest bill for Ireland

A SIX MONTH delay by the Department of Enterprise and Employment in applying for European Social Fund (ESF) money has landed the Exchequer and the taxpayer with an interest bill of up to £5 million.

The first instalment of about £100 million due to the Republic under the EU Human Resources, programme is due to be paid within the next week, six months later than the equivalent payment last year.

The delay has forced many voluntary organisations involved with the disabled to take out bank overdrafts or risk the collapse of their training schemes.

The Department denies it was tardy in applying for the money, but sources in Brussels are emphatic that the £103 million earmarked for Ireland had been lying idle since January because an application was not made until late May.

The chief executive of the National Rehabilitation Board (NRB), Dr Arthur O'Reilly, said he had seen not an ecu for this year. "It's money down the drain," he commented.

Privately, the EU Commissioner responsible for the ESF, Mr Padraig Flynn, has expressed concern that the delay could mean that Ireland will lose significant ESF support when the programme comes up for mid term review at the end of this year.

About £61 million is due to the Department of Education, £34 million to FAS, and £9 million to the NRB. A much smaller amount, about £50,000, is due to the Department of Justice for the retraining of prisoners with drugs and sex offences.

A spokesman for the Department of Enterprise and Employment denied it was to blame for the late payment, saying the procedures employed by the Commission this year were more stringent than in previous years.

"Before the 1996 money is paid out, we have to show that every penny of the 1995 funding was spent correctly," he said.

"Ireland is one of the few countries drawing down money in real time. We draw down 98 cent of what we're entitled to. So we're victims of our own success. The more we draw down, the more we have to account for.

However, a senior Commission official dealing with Irish ESF funds said the procedures for drawing down money had not changed since last year. The payment procedure was "relatively complex", but the Commission had done everything it could to speed up the process and a large payment was now en route.

Another source in Brussels confirmed there had been a delay in the Irish application. "We can't pay out money until we have a claim for payment." There was "no slouching" on Irish dossiers within the employment and social affairs directorate presided over by Mr Flynn, she added.

It is understood the Irish application for funding was completed and lodged at the end of May. In contrast, the 1995 application was submitted in November 1994, and the money was paid out in January 1995. The £103 million sought this year is actually smaller than the £124 million paid out last year.

Mr Han de Jong, chief economist with Goodbody stockbrokers, said the latest figures for the Exchequer Borrowing Requirement the difference between Government spending and income would reveal ESF receipts were almost £100 million behind schedule.

But he said this was "not a disaster", adding that the cost in interest payments had to be seen in the context of overall borrowing this year of £729 million.

In 1994, the Exchequer was forced to pay £210,000 in over draft payments because of delays in allocating £12 million to the NRB.